Pieter Elbers: Indian budget airline IndiGo is ready to chase new frontiers
The company will be formed in three years. Image Credit: Virendra Saklani/Gulf News

IndiGo is setting up an aircraft-leasing subsidiary in the western Indian state of Gujarat, following a similar move by Air India Ltd as the country’s two biggest carriers enlarge their fleets.

The budget airline, which has a market share of 63 per cent in India, also plans to order 10 additional Airbus SE A320neo aircraft, expanding a 300-jet deal inked in 2019, its parent InterGlobe Aviation Ltd said in a stock exchange filing Monday.

Airlines in India are ramping up capacity to capture a boom in passenger traffic in one of the world’s fastest-growing aviation markets.

IndiGo also placed a record order with Airbus for 500 aircraft in June, following Air India’s purchase of 470 jets from Airbus and Boeing Co. The country’s newest airline, Akasa, is finalising a deal for narrowbody planes.

IndiGo will invest as much as Rs300 million ($3.6 million) in the wholly-owned leasing unit and provide corporate guarantees of up to $996 million as security against financial obligations, according to the filing. The company will be formed in three years.

The airline will need approvals from India’s central bank to invest in Gujarat International Finance Tech-City, a financial hub in Prime Minister Narendra Modi’s home state. The so-called GIFT City offers relaxed taxes and rules to firms, and recently attracted investment from Alphabet Inc.’s Google.